Bitcoin Vs Altcoins: A race with the Industry Dominant

• Since the first and oldest digital asset launch, the industry has seen several players jumping into the crypto market, which has evolved quite well to date.

• Bitcoin is dominant, but alternative coins have their own features and advantages. Both are simultaneously existing and thriving.

• Here is a clear understanding of what differentiates Bitcoin from Altcoins.

Cryptocurrencies are digital assets acting as an alternative to fiat currencies for some recent years. They are secured via cryptography which makes them more secure and eliminates problems of the fiat currencies.

Digital currencies enable secure digital payments without requiring an intermediary and are designed so that they are free from manipulation and control of the central authorities. 

Crypto coins are entered into circulation through a process called mining. It facilitates the introduction of new cryptocurrency units. It is how transactions are confirmed on the network and are critical for the maintenance and development of blockchain ledgers.

The process of altering the shared ledger with a newly added transaction in which all the core supporters synchronize the copies is called cryptocurrency mining. These core supporters are known as miners.

The very first and the leading cryptocurrency is Bitcoin. But the ones that were introduced after Bitcoin are all collectively known as Altcoins.

Although some of the Altcoins might have features better than that of Bitcoin, matching the level of security that Bitcoin has achieved is still not entirely possible for the Altcoins. 

What is Bitcoin:

Bitcoin proved to be an invention that allowed a bunch of software users and computers to create and operate a digital currency without the intervention of any central authority.

Introduced by a pseudonymous figure called Satoshi Nakamoto, Bitcoin was launched in 2009. All Bitcoin transactions are verified through the huge computing power called mining. 

The Bitcoin protocol uses:

• Peer-to-peer networking- The computer nodes review the transactions, and miners compete to add the new block to the network. All this is done through peer-to-peer networking.

• Finite supply- Bitcoins are valued because there is a limited supply of only 21 million coins. 

• Public key Cryptography- The wallet software provides the users with a public and a private key that makes sure their holdings are safe and gives you ownership. 

Bitcoin has indeed witnessed quite a lot of changes since its launch. For instance, El Salvador accepted it as a legal tender in 2021.

The value has risen massively from 2009 and has dominated the market compared to other cryptocurrencies.

Although the cryptocurrency facilitates the users in a significant way, the asset class is not free from risks too, like price volatility, security risks, governmental regulations, etc. 

What are Altcoins:

Altcoins can be called variations or alternative coins to Bitcoin. In Fact, all coins other than Bitcoin are collectively called Altcoins. The developers create these Altcoins to enhance or add the features not provided with Bitcoin.

But since Bitcoin was the first cryptocurrency, altcoins have to use it as a benchmark. Since 2009, numerous altcoins have been launched, but both Bitcoin and Altcoin use blockchain technology to operate.

And a lot of them operate on the basic structure of Bitcoin; hence they use peer-to-peer networking, are entered into circulation through mining, and provide secure ways to carry out transactions on the web. 

Altcoins can be of varied types:

• Security Tokens- Security tokens traditional assets like shares or stocks represented digitally on the blockchain.

• As the name suggests, meme coins, also known as parody coins, are inspired by jokes or memes from social media. The first meme coin was Dogecoin, inspired by the popular Doge meme based on the Japanese Shiba Inu dog. Contrary to their name, some prominent meme coins have been Dogecoin, Shiba Inu, etc., that have ruled the industry recently.

• Utility Tokens- Utility tokens allow holders to access blockchain-based products and services. The tokens can be used for purchasing, redeeming rewards, or paying network fees.

• Stablecoins- Stablecoins are the ones that aim to eliminate the market volatility of cryptocurrencies. These coins are pegged by something, like fiat currency, precious metals, or any other crypto asset. Popular stablecoins are Tether, USDC, MakerDAO’s Dai, etc.

• Mining-based Altcoins- These coins use the mining process to remain in circulation. And most of them use the proof-of-work consensus, which uses mathematical calculations to generate new coins. For instance, Monero, ZCash, Litecoin are all mining-based Altcoins.

• Pre-mined Altcoins- These are not produced via any algorithm but distributed before being listed on any crypto exchange. An Example is Ripple’s XRP. 

A few prominent Altcoins are:

Ethereum(ETH): The first alternative to Bitcoin was Ethereum, launched by Vitalik BUterin in 2014. It is a decentralized software platform that enables building of decentralized apps(DApps) and smart contracts.

The aim was to create a decentralized financial system without geographical and governmental boundaries. Its cryptographic native token is Ether(ETH), the second-largest cryptocurrency by market capitalization. Currently, it works on the proof-of-stake strategy. 

VeChain(VET): VeChain is another popular platform using two tokens, VET and VTHO, to create and manage based on its VeChainThor public blockchain.

Binance Coin(BNB): BNB is a utility cryptocurrency that operates as a payment mode for fees associated with trading on the Binance exchange. The coin is a vital part of the smooth functioning of several Binance sub-projects.

Harmony(ONE): It is a blockchain platform facilitating the use and creation of decentralised app(DApps)  

Ripple XRP(XRP): It was created by Ripple as a more scalable and speedy alternative to other digital assets and platforms. It is currently among the top-performing coins. 

ALSO READ: Aperture as the app store of decentralized applications

Bitcoin Vs. Altcoins:

Network and Notability: No matter how many altcoins enter the industry, Bitcoin remains to be the top cryptocurrency by market capitalization. It has built a diverse and large community for around 12 years.

A huge number of nodes globally connect to form Bitcoin’s network. The industry dominance that Bitcoin has, sets it apart despite the existence of similar altcoins and logos.

Reliability: Bitcoin gains the trust of most investors because it is the only cryptocurrency with experience of more than a decade. And it has survived attempted bans, internal disputes, external attacks, etc.

Hence, it has more trust and reliability compared to Altcoins. Although now, even altcoins like Ethereum have made their position among the top currencies too.

Evolution and Improvements: Over time, the cryptocurrency has improved and evolved in several ways, like technological improvements, scalability, and decentralized nature. 

Currently, the Bitcoin network has a huge number of miners. Despite criticisms and attempts to ban it, it had managed to gain wider adoption. 

The altcoins have been discovered, keeping Bitcoin as a benchmark. Hence, if an altcoin is better in any way, it’s because Bitcoin didn’t have the element. Bitcoin acted as a precedent for them.

Competition: Unless an Altcoin has solid fundamentals and strong practical cases, it might have difficulty catching up with Bitcoin. Plus, Bitcoin has ample track records to show its reliability and ability to surpass market crashes. 

Price volatility: Although the whole cryptocurrency market is volatile, the price volatility of Bitcoin indirectly affects Altcoin’s price because it is the dominant one in the industry.

The rise and fall in prices also depend on the entities favoring a coin. For example, Tesla CEO Elon Musk often promotes Dogecoin, resulting in its popularity and adoption. 

Catching up with new tech: Bitcoin has existed for more than a decade and is the oldest cryptocurrency with its technologies and network.

But the coins that are now being discovered might have better and new generation technologies than that of Bitcoin. Hence, both Bitcoin and Altcoins can be better than each other with some elements or the other.

The crypto industry has seen several changes with varied aspects. Several coins have increased the competition and difficulties in the industry, with every coin fighting to be among the top.

Both of them are thriving simultaneously in the industry. And with the sub-sectors of the crypto industry like Metaverse and NFTs, the popularity of some coins might be more than others. But the growth and evolution of cryptocurrencies seem to be ever-increasing now.